Healthcare Perspectives


Health Care in 2018: Tackling Hospital Business Challenges in the Face of Regulatory Unrest and an Evolving Health Insurance Marketplace

Feb 23, 2018
By: Nicholas E. Smith

With each passing year, the continued rise in health care costs adds further pressure for change in the delivery of health care services. Change efforts appear to be taking shape on multiple fronts, including regulatory efforts and an evolving public and private health insurance marketplace. On top of these national trends, hospitals will continue to face ongoing business hurdles in 2018, including cybersecurity threats, regulatory requirements such as emergency preparedness, and ongoing challenges with health care provider staffing, reimbursement, and revenue cycle. Hospitals should be prepared as these national and local health care trends are likely to impact all areas of their business, from staffing patient care areas to reimbursement and collections to risk management, and technology.

Regulatory Unrest

Legislative efforts to repeal Affordable Care Act provisions were ultimately unsuccessful, though the future of these provisions are far from secure.

  • The repeal of the individual mandate in the 2018 GOP Tax Bill will create uncertainty in the individual health insurance marketplace for 2019, as 13 million people currently required to purchase insurance through the individual exchange may forego insurance when it becomes optional. Obamacare’s individual insurance markets, federal subsidies to help Americans pay monthly insurance premiums, and Medicaid expansion in the dozens of states that implemented it will all still be in effect however, unless further congressional action takes place.
  • MEDPAC recently voted to ask congress to eliminate MIPS and establish a new voluntary value program in which clinicians join a group and are compared to each other on the quality of care for patients. Physicians who perform well would receive an incentive payment. The current program is criticized for being too burdensome on physicians and not incentivizing quality. It is not clear if this program will continue in its current state or be replaced by another approach that ties reimbursement to quality.


  • Keep a steady course and focus on advancing those initiatives that are not likely to be threatened by regulatory changes.
  • Keep a pulse on trusted resources for regulatory news and information as it is published.
  • Have a contingency plan for regulatory changes that may be on the horizon or are currently being debated at the national level, such as the elimination of the MIPS program and the loss of insurance for a portion of the population that will no longer have a mandate to purchase insurance in 2019.
  • Comply with all current regulations, even if they are likely to change in the future.

Health Insurance Evolution

While there is high anticipation and fanfare around health care innovation in the private sector, high profile public-private partnerships are slow to grow in popularity and success.

  • Enrollment in Medicare Advantage plans has increased steadily since 2004. Since the ACA was established in 2010, Medicare Advantage enrollment has grown 71%. While the main focuses on Medicare Advantage plans have been around efficiency, premiums, and beneficiary costs, there have been unintended consequences for providers, especially in rural areas. Provider network coverage and patient steerage could serve as a way for Medicare Advantage plans to reduce costs per beneficiary and keep claim costs down. This will impact critical access hospitals, that receive preferential reimbursement from Medicare and may see s decline in Medicare volume due to Medicare Advantage Plan provider choice preferences.
  • Amazon, Berkshire Hathaway, and JPMorgan Chase announced an independent health care company for their employees. While details are still unclear, the impetus for the alliance is frustration over rising health care costs and a desire to disrupt the current health care system.


  • Embrace change. The health insurance evolution has been a long time coming. Business as usual may not be an option. But there may be changes that your organization can make to maximize your success under evolving insurance and reimbursement models. Long-range strategic planning is a helpful way to devote organizational time and effort to understanding what changes are ahead and developing a roadmap for responding to them.
  • Plan for multiple scenarios and possible outcomes to industry-wide or organizational challenges. Whether it is a shift in service, payer mix, or reimbursement models, scenario planning is an invaluable exercise and will better prepare your organization for change.

 Hospital Business Challenges

Hospitals will continue to face business challenges in 2018 in the areas of workforce and recruitment, revenue cycle, cybersecurity, and regulatory challenges such as emergency preparedness.

  • A rise in cybersecurity breaches is expected in 2018. According to recent studies, while 95 percent of provider executives believe their organization is protected against cybersecurity attacks, only 36 percent have access management policies and just 34 percent have a cybersecurity audit process.
  • Workforce and recruitment challenges are expected to rise. Specifically, nursing shortages will intensify due to a combination of an aging patient population and anticipated nursing retirements. Physician shortages are also expected to grow. According to recent surveys, 49% of physicians often or always experience feelings of burnout. With a physician shortage that could grow to over 100,000 physicians nationwide by 2030, the slow growth of entry-level residency programs, and the cap on Medicare-funded residency training positions, hospitals and clinics will face more competition for a limited workforce.
  • With the continued growth in high deductible health plans, the shift of financial burden to the patient, and declining reimbursement for services, optimizing the revenue cycle process will be more important than ever.
  • The ongoing burden of regulatory compliance is a constant in the health care industry. 2016 Medicare and Medicaid Emergency Preparedness regulations call for hospitals to plan adequately for both natural and man-made disasters and coordinate with federal, state, tribal, regional, and local emergency preparedness systems. These regulations required compliance by November of 2017.


  • Make sure you have a plan in place to keep your organization secure from cybersecurity threats. Carry out periodic audits of your cybersecurity policies and shore up any weaknesses or provide education/training if necessary to vigilantly protect digital security in your organization.
  • Keep a close eye on your physician and organizational staffing resources. Plan for retirements, and periodically take a pulse of your workforce to gauge whether you are meeting community and patient needs, and if not, develop a recruitment plan that achieves the appropriate level of physician and staffing workforce.
  • Stay on top of your organization’s revenue cycle process by researching best practices for claims management, A/R, denials management, patient financial responsibility, and contract management. Carry out improvement plans in areas where your organization may be deficient or below industry benchmarks.
  • Review compliance with new and current regulations such as Emergency Preparedness and other federal (and state, as applicable) requirements. If you are worried about compliance, seek outside assistance in reviewing organizational policies and revise/update policies as necessary.


Nicholas E. Smith
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